Check Twice for Fraud

Check Fraud is one of the most common types of fraud in banking. Even though it may not seem as common with the surge of digital alternatives, it has become a continued issue amongst businesses and inpiduals. According to the Federal Reserve’s website, a 2025 study showed that 63% of survey participants have experienced actual or attempted check fraud in 2024 and 2025. While fraudsters won’t slow down, there are several ways to identify and defend yourself against potential threats.

How to Identify Potential Fraud Attempts:

There are three categories to help you identify check fraud threats

1) Physical Manipulation and Unauthorized Use:

When checks are altered, the information on the check can be changed, so it can reflect the fraudster’s desire. For example, a person could steal your check and “wash” it, so they can change the name of payee or the amount. Check washing would allow them to cash the check under a different payee name or in a higher amount of money. 

Examples of Suspicious Unauthorized Use with Checks:

Alterations On a Check:

  • Different Handwriting or pen ink colors
  • Overwritten amounts
  • Unexplainable smudges or erasures

Suspicious Check Stock:

  • Thin paper or lack of security features like watermarks or microprinting
  • low-quality or off-centered logos

Magnetic Ink Character Recognition (MICR) Line Problems

2.) Behavioral Patterns and Transaction Activity:

When reviewing transaction activity, it is important to be aware of unusual account activity, so you can easily identify potential fraudulent attempts from the start. For instance, if you see sudden large withdrawals or checks being deposited from unfamiliar locations, you may be experiencing check fraud. If a transaction seems suspicious, investigate the occurrence and ensure your account activity is consistent with your operations.

Examples of Suspicious Transaction Activity:

Check Number Issues

  • Duplicate check numbers being cashed,
  • Checks reflecting abnormal check numbers on an established account, or if checks being cashed out of sequence
    • For Example: check #102 is being cashed on your behalf when your checks typically start at #5000 and above

Stale or Post-Dated Checks

  • Future dated checks that are being deposited earlier or checks that are older than 6 months

Sudden Checks cashed in large dollar amounts

Multiple Checks written in quick succession

3.) Process and Verification Failures:

It is common to work with multiple vendors or businesses. Whatever situation you may find yourself in, make sure the correct verification processes are in place, so your books remain accurate without having to slow down.

Examples of Suspicious Process Failures:

Verification Failures:

  • Signature irregularities
  • Mismatch in the payee or the amount of the check

Process Abuse

  • Duplicated checks being cashed at once
  • Manipulating remote deposit features

Check Kiting: Exploiting the float time between banks to artificially inflate check balances

Positive Pay Evasion: Bypassing bank security precaution by altering a check, creating counterfeit checks, or initiating fraudulent ACH transfers by replicating authorized payments

Employee or Payroll Manipulation

  • Check tampering: altering check information to withdraw more money from an employer’s business account
  • Forged Maker Schemes: an employee signing blank checks with forged signatures without having the authority to do so

What To Do If You Think You’re a Victim of Check Fraud:

Experiencing check fraud can be overwhelming if not addressed as soon as possible. If available, refer to your bank’s fraud tools to help protect your account in the future.

If you believe you are experiencing check fraud, notify your bank as soon as possible and place a stop payment on the check in question. You may also need to close the accounts, so confirm with your bank as to how to proceed if you are unsure. Report the incident to the Federal Trade Commission and local authorities, so you have the documentation needed for your protection and possible insurance claims.

For more information about check fraud or additional resources, review the Client Protection resources at the bottom of our website home page.